PRESS DIGEST - Wall Street Journal - Sept 1

Sept 1 (Reuters) - The following were the top stories in The Wall Street Journal on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

* Evacuations were in high gear Sunday as Hurricane Gustav bore down on the U.S. Gulf Coast, threatening to cut a devastating swath across the Gulf of Mexico’s oil and gas infrastructure and to flood at least parts of New Orleans.

* Senator John McCain canceled the first day of his Republican National Convention, and his campaign made plans to turn the gathering into a giant fundraiser as they braced for the fallout from Hurricane Gustav. U.S. President George W. Bush and Vice President Dick Cheney both had earlier called off appearances.

* McCain’s selection of Alaska Governor Sarah Palin, the first woman on a Republican presidential ticket, was a surprise choice aimed at picking up Hillary Clinton supporters. Conservatives hailed the move, but Palin’s thin political resume could undercut the campaign’s key theme of experience.

* A Bank for International Settlements (BIS) study casts doubt on the accuracy of a key index that banks use to gauge their subprime-related losses. The BIS report also says global banks have been funneling more funds out of the U.S. than into it since market turmoil erupted in the summer of 2007.

* Treasury Secretary Henry Paulson is embroiled in emergency planning on ways to shore up Fannie Mae FNM.N and Freddie Mac FRE.N to avert a destabilizing jolt to the economy. Intervention scenarios range from buying preferred shares in the companies to various structures for lending.

* Lehman Brothers Holdings Inc LEH.N, trying to shore up its balance sheet, has settled on a structure that will allow it to offload billions of dollars in real-estate loans from its books. The Wall Street investment bank is still hammering out the final details and it isn’t clear when a plan will be unveiled.

* Russia’s claim that the U.S. orchestrated the conflict in Georgia has sharpened the superpowers’ dispute. But despite close links with Georgia, the U.S. for years has found the relationship with Georgian President Mikheil Saakashvili difficult to manage.

* A 6.1-magnitude earthquake killed at least 32 people and injured scores more in China’s southwestern Sichuan province. The region has been on edge since a May quake in northern Sichuan killed nearly 70,000 people.

* The U.S.-led coalition, Afghan government and the United Nations will launch a joint probe into last week’s deadly raid in a village in the country’s west, a top NATO official said.

* Hindus in Indian-controlled Kashmir ended two months of protests after the state government agreed to allow pilgrims temporary use of land near an important Hindu temple, an issue that triggered violence by both Hindus and Muslims.